Residential real estate investments are known for being diverse and profitable. So you’ve probably heard of the age-old residential real estate debate of single family homes vs multi family homes. But of all the types of investment property you can buy, single family homes are easily the best. In this blog, we’ll analyze this bold statement through three important questions:
- Why should you be investing in single family homes?
- Why are single family homes the best real estate investment in the US housing market?
- What are the best real estate markets for buying a single family home?
Related: Single Family Homes vs. Multi Family Homes – Infographic
Why Investing in Single Family Homes Is a Must
There are many reasons why investing in single family rentals is the best real estate investment strategy out there. For starters, single family rentals are among the most affordable investment properties, especially compared to multi family properties. These income properties also have very high cash flow. This is largely due to tenants paying for utility bills, which isn’t typical for multi family properties.
Speaking of tenants, this type of rental property can attract good tenants. Tenants of single family properties typically view the rental property as their home, leading to fewer turnovers and more care from tenants. Real estate investors of single family properties will also find the property management to be easier because there is only one unit.
Single family homes trump their multi family counterparts in another aspect: natural real estate appreciation. So even after investors have exhausted renting out a single family rental home, they can easily sell it for a good return on investment and with great liquidity. This is because single family rentals garner high demand from both homebuyers and real estate investors in the market.
This is exactly why single family homes are the best rental properties, no matter the year. But what makes them so great?
Why Single Family Homes Are the Best Rental Properties
Single family homes are forecast to be in high demand. This is due to a variety of factors. According to CNBC, single family rentals are experiencing decreased vacancy rates. In the third quarter of 2019, single family property vacancies were 6.8%, which was down from 7.1% from the year prior.
The low supply of rental single family homes contributes to their high demand. Even with an increased supply after the foreclosure crisis, the number of single family homes for rent has dropped significantly. The low supply has led to increased rent from these properties. CoreLogic reports that single family rents increased 3% year over year in September. And since investing in single family rentals has been so successful, real estate investors have not been selling their properties. This further reinforces the low supply.
The combination of these factors makes investing in single family homes the best real estate strategy for 2020. If you can get your hands on one in a good location, you can enjoy the high rental occupancy rates and rising rental income next year.
You can easily find profitable single family homes using Mashvisor’s property search tools. Start your search now.
The Best Single Family Rental Markets in the US Housing Market
As mentioned, if you do want to profit from single family homes, you have to buy one in a good location. So where are the best single family rental markets? We went ahead and found them for you! Below, we have compiled the data on the top single family markets in the US for buying rental property. These cities are particularly popular locations for single family homes because they are in high demand and profitable. As you will see from Mashvisor’s data, each city listed has a good cap rate for single family homes.
Related: Where Can You Find Reliable Cap Rates for Single Family Homes?
The Atlanta Real Estate Market
Atlanta, GA
- Median Property Price: $415,406
- Price per Square Foot: $204
- Price-to-Rent Ratio: 17
- Traditional Rental Income: $2,018
- Traditional Cap Rate / Cash on Cash Return: 2.6%
Learn more about Atlanta single family homes by reading our Atlanta Real Estate Market Report.
Boca Raton, FL
- Median Property Price: $654,874
- Price per Square Foot: $249
- Price-to-Rent Ratio: 21
- Traditional Rental Income: $2,567
- Traditional Cap Rate / Cash on Cash Return: 1.3%
Buffalo, NY
- Median Property Price: $147,314
- Price per Square Foot: $88
- Price-to-Rent Ratio: 12
- Traditional Rental Income: $1,061
- Traditional Cap Rate / Cash on Cash Return: 2.5%
Charleston, SC
- Median Property Price: $650,595
- Price per Square Foot: $285
- Price-to-Rent Ratio: 29
- Traditional Rental Income: $1,855
- Traditional Cap Rate / Cash on Cash Return: 1.7%
Chicago, IL
- Median Property Price: $282,352
- Price per Square Foot: $156
- Price-to-Rent Ratio: 15
- Traditional Rental Income: $1,967
- Traditional Cap Rate / Cash on Cash Return: 2.7%
Learn more about Chicago single family homes by reading our Chicago Real Estate Market Report.
Colorado Springs, CO
- Median Property Price: $444,483
- Price per Square Foot: $171
- Price-to-Rent Ratio: 23
- Traditional Rental Income: $1,638
- Traditional Cap Rate / Cash on Cash Return: 1.7%
Columbia, SC
- Median Property Price: $227,815
- Price per Square Foot: $103
- Price-to-Rent Ratio: 16
- Traditional Rental Income: $1,154
- Traditional Cap Rate / Cash on Cash Return: 2.0%
Columbus, OH
- Median Property Price: $214,644
- Price per Square Foot: $132
- Price-to-Rent Ratio: 15
- Traditional Rental Income: $1,188
- Traditional Cap Rate / Cash on Cash Return: 2.0%
Dallas, TX
- Median Property Price: $424,601
- Price per Square Foot: $193
- Price-to-Rent Ratio: 18
- Traditional Rental Income: $1,976
- Traditional Cap Rate / Cash on Cash Return: 1.4%
Learn more about Dallas single family homes by reading our Dallas Real Estate Market Report.
Dayton, OH
- Median Property Price: $112,977
- Price per Square Foot: $67
- Price-to-Rent Ratio: 11
- Traditional Rental Income: $896
- Traditional Cap Rate / Cash on Cash Return: 3.3%
Daytona Beach, FL
- Median Property Price: $284,056
- Price per Square Foot: $154
- Price-to-Rent Ratio: 17
- Traditional Rental Income: $1,383
- Traditional Cap Rate / Cash on Cash Return: 2.5%
Related: Why Investing in Daytona Beach Real Estate Is Smart
Grand Rapids, MI
- Median Property Price: $275,949
- Price per Square Foot: $131
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,238
- Traditional Cap Rate / Cash on Cash Return: 1.6%
Greensboro, NC
- Median Property Price: $277,098
- Price per Square Foot: $136
- Price-to-Rent Ratio: 16
- Traditional Rental Income: $1,462
- Traditional Cap Rate / Cash on Cash Return: 2.9%
Houston, TX
- Median Property Price: $427,627
- Price per Square Foot: $168
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,905
- Traditional Cap Rate / Cash on Cash Return: 1.5%
Learn more about Houston single family homes by reading our Houston Real Estate Market Report.
Knoxville, TN
- Median Property Price: $315,235
- Price per Square Foot: $131
- Price-to-Rent Ratio: 25
- Traditional Rental Income: $1,039
- Traditional Cap Rate / Cash on Cash Return: 1.0%
Las Vegas, NV
- Median Property Price: $421,327
- Price per Square Foot: $189
- Price-to-Rent Ratio: 24
- Traditional Rental Income: $1,447
- Traditional Cap Rate / Cash on Cash Return: 1.4%
Learn more about Las Vegas single family homes by reading our Las Vegas Real Estate Market Report.
Los Angeles, CA
- Median Property Price: $1,086,975
- Price per Square Foot: $590
- Price-to-Rent Ratio: 24
- Traditional Rental Income: $3,824
- Traditional Cap Rate / Cash on Cash Return: 1.6%
Learn more about Los Angeles single family homes by reading our Los Angeles Real Estate Market report.
Lincoln, NE
- Median Property Price: $263,304
- Price per Square Foot: $126
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,183
- Traditional Cap Rate / Cash on Cash Return: 1.0%
Milwaukee, WI
- Median Property Price: $139,121
- Price per Square Foot: $99
- Price-to-Rent Ratio: 11
- Traditional Rental Income: $1,089
- Traditional Cap Rate / Cash on Cash Return: 3.1%
Myrtle Beach, SC
- Median Property Price: $357,553
- Price per Square Foot: $145
- Price-to-Rent Ratio: 22
- Traditional Rental Income: $1,353
- Traditional Cap Rate / Cash on Cash Return: 1.3%
Nashville, TN
- Median Property Price: $452,363
- Price per Square Foot: $1,404
- Price-to-Rent Ratio: 21
- Traditional Rental Income: $1,743
- Traditional Cap Rate / Cash on Cash Return: 1.9%
Learn more about Nashville single family homes by reading our Nashville Real Estate Market Report.
Portland, OR
- Median Property Price: $568,644
- Price per Square Foot: $265
- Price-to-Rent Ratio: 22
- Traditional Rental Income: $2,158
- Traditional Cap Rate / Cash on Cash Return: 1.3%
Raleigh, NC
- Median Property Price: $479,532
- Price per Square Foot: $179
- Price-to-Rent Ratio: 25
- Traditional Rental Income: $1,581
- Traditional Cap Rate / Cash on Cash Return: 1.1%
Richmond, VA
- Median Property Price: $303,714
- Price per Square Foot: $153
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,353
- Traditional Cap Rate / Cash on Cash Return: 1.9%
Sacramento, CA
- Median Property Price: $351,784
- Price per Square Foot: $240
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,562
- Traditional Cap Rate / Cash on Cash Return: 1.4%
San Diego, CA
- Median Property Price: $837,356
- Price per Square Foot: $533
- Price-to-Rent Ratio: 25
- Traditional Rental Income: $2,767
- Traditional Cap Rate / Cash on Cash Return: 1.3%
Learn more about San Diego single family homes by reading our San Diego Real Estate Market Report.
San Jose, CA
- Median Property Price: $1,029,459
- Price per Square Foot: $633
- Price-to-Rent Ratio: 26
- Traditional Rental Income: $3,332
- Traditional Cap Rate / Cash on Cash Return: 1.4%
Tallahassee, FL
- Median Property Price: $292,123
- Price per Square Foot: $141
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,300
- Traditional Cap Rate / Cash on Cash Return: 1.6%
Single family homes have consistently been the best residential property type for many years. This year will be a particularly good one for buying single family homes for sale and renting them out!
To start searching for profitable and cheap single family homes, click here to start your 7-day FREE trial with Mashvisor!